The deal would end a year of political deadlock, in which none of the two political gladiators was able to form a government.
Netanyahu’s right-wing Likud and Gantz’s Blue and White party issued a joint statement saying they had signed a unity deal.
Elections were held in April and September 2019 and on March 2 this year.
Neither party won a governing majority in parliament.
Israeli media reported they would take turns as prime minister, with Netanyahu going first.
“We prevented fourth elections. We’ll safeguard democracy,” Gantz tweeted after the announcement was made.
“We’ll fight the coronavirus and look out for all Israeli citizens. We have a national emergency government.”
Netanyahu spoke with all the leaders of his right-wing religious bloc of parties after signing the unity deal, his spokesman said in a statement.
“The prime minister said that the establishment of a unity government in the face of the coronavirus pandemic is a national imperative,” the statement said.
The deal is expected to be signed formally after Independence Day next week, after which the other right-wing parties would sign on to it.
*Reported by Times of Israel